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Wednesday, January 14, 2009

Financing a Work from Home Business

Finding financing is a vital part of the start-up process when starting a work from home business. There are a few different ways to fund your venture and it will be one of the very first things that you will need to do after you decide upon the business that you will start. Some of the more creative ideas are listed here as a reference for you to use in order to find your financing.

An important thing to do when preparing to find your financing is to make a good, solid business plan. This should be one of the first steps in planning your new work from home business. A business plan will be necessary to show how profitable that your chosen business is intended to become. Banks and private lenders will be sure to look for the proposed income when deciding to approve or deny your financing request.

Try to obtain financing with your local banking institution. Take your business plan with you to the bank where you already have your checking or savings accounts, they will be more likely to loan money to a loyal customer in good standing. You may have to offer some sort of collateral such as personal property although most small business loans will retain an interest in your business.

Another option for financing your work from home business is to get a couple of credit cards for basic office supplies and equipment. If your credit is sufficient, this is an excellent way to purchase the things that you will need for your home office. Computers, desks, printers, fax machines and paper products can be charged to a credit card and paid back over time. Make sure that you choose a low interest rate card with no annual fee, if you go down this avenue or the extra expenses could eat up your profit.

The Small Business Association may be able to help with your financing, if your credit history isn’t flawed. The SBA is simply a guarantor of the loans that are made by other means, such as private lenders and non-profit organizations. Getting a microloan would be good for financing a work from home business and is available in most states. The 504 loan program can be used for actual building and land purchases, if you decide to go with an office outside of your home. They also offer counseling and assistance for starting a business, as well as online training topics like how to prepare a loan proposal.

There is another option that is a bit more risky when financing a work from home business and it is to get a home equity loan. You have an option of taking out a second mortgage, if you really think that you are going to work hard to become successful in your business. Otherwise, this could prove to be a risky way to finance your work from home business. You could actually lose your house if things go badly and you will not even have a home to work from, let alone any way to repay the loan.

Lastly, you could ask for support and backing from your family and friends. There may even be members of your church that would act as an angel investor, but you should definitely sign a notarized contract to secure their interest and the transaction. The bottom line is that financing a work from home business can be done in various ways and will establish a concrete foundation for a successful venture.

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